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Are IRA investment expenses deductible?
Old 11-28-2004, 05:29 AM   #1
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Are IRA investment expenses deductible?

I was wondering what investment expenses are deductible in an IRA account besides custodial fees (eg accrued interest, trade costs, commissions, managed account fees, etc).

Anyone know what the IRS allows, if anything?

Thx,

Doug
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Re: Are IRA investment expenses deductible?
Old 11-28-2004, 09:35 AM   #2
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Re: Are IRA investment expenses deductible?

From what I understand the answer is no. *None of the fees that occur "inside" the IRA are tax deductible either now or "saved up" for the future when you withdraw.
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Re: Are IRA investment expenses deductible?
Old 11-28-2004, 09:56 AM   #3
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Re: Are IRA investment expenses deductible?

In my previous life, I used to work as a programmer/consultant in for one of the very big mutual funds/brokerage houses.

I don't know if this option is available to retail customers or not, or if you need to be one of the high-net-worth individuals, but I do remember coding for instances where customer trading was done in a tax-favored account, but all fees and expenses were paid out of another account.

I remember it being explained to me that it was so that fees and expenses could be paid out of after-tax money for the client. Makes a lot of sense to me if the transaction costs are high enough to make it worth it. I do very little trading in my own ret acct so I never pursued it for myself.

It may be worth asking your broker/fund company if they offer it.
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Re: Are IRA investment expenses deductible?
Old 11-29-2004, 05:05 AM   #4
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Re: Are IRA investment expenses deductible?

Quote:
I
I don't know if this option is available to retail customers or not, or if you need to be one of the high-net-worth individuals, but I do remember coding for instances where customer trading was done in a tax-favored account, but all fees and expenses were paid out of another account.

I remember it being explained to me that it was so that fees and expenses could be paid out of after-tax money for the client. Makes a lot of sense to me if the transaction costs are high enough to make it worth it. I do very little trading in my own ret acct so I never pursued it for myself.

It may be worth asking your broker/fund company if they offer it.
Our 401(k) provider offers the same option; we can pay expenses such as brokerage fees with after-tax money. The advantage is that it maximizes the amount which goes into the 401(k). The expenses are deductible to the extent any investment expense would be deductible.
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